Hedgehog (Hh) signaling regulates cell proliferation and differentiation in various organs during embryogenesis. In the pancreas, the role of this pathway is complex. At early stages, Hh signaling is excluded from the pancreas and ectopic activation of the pathway impairs pancreas formation by disturbing mesenchymal-epithelial interactions. In contrast to this inhibitory role, our preliminary data suggest a positive, cell autonomous role for Hh signaling during endocrine cell formation and function. The exact nature of this novel, cell autonomous activity remains to be elucidated. Little information is also available about the upstream mechanisms that regulate Hh signaling in pancreatic epithelium. Recent results have revealed that primary cilia, cellular appendages found on many cell types, control the level of Hh signaling activity. Primary cilia are present on adult duct and endocrine cells within the pancreas, the same cell types that are marked by expression of Ptc, a transcriptional target gene of Hh signaling. Our preliminary results indicate that cilia control activation of Hh signaling in pancreatic cells. In the first specific aim, we will address the cell autonomous requirement for Hh signaling in pancreatic epithelium. This will be accomplished by analyzing transgenic mice in which Smoothened, the gene coding for an essential component of the Hh pathway, has been eliminated specifically in pancreatic epithelial cells. In the second specific aim, we propose to elucidate the role of cilia in regulating the level of Hh signaling in pancreatic epithelium and in endocrine -cells. Transgenic mice ectopically expressing GLI2, a transcriptional activator of Hh signaling, in pancreatic epithelial and -cells that lack primary cilia have been generated for this purpose. In the third specific aim, we will perform cell culture experiments to analyze the mechanisms by which primary cilia control Hh activity in pancreatic cells. In summary, experiments proposed in this application will address the cell autonomous requirement for Hh signaling in pancreatic epithelial cells and the role primary cilia play in regulating the level of Hh activity in these cells. Given the distinct roles Hh signaling plays at different time points during pancreas and endocrine cell development and function, understanding of these effects will help to optimize strategies designed to generate functional -cells from embryonic stem cells.